Q3 2024 Newmont Corp Earnings Call
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Speaker Change: [noise] good morning, and welcome to Newmont's third quarter 'twenty to 'twenty four adding scope.
All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the stock he followed by zero.
Speaker Change: After today's presentation there'll be an opportunity to ask questions. Please note. This event is being recorded.
Speaker Change: I'd now like to turn the conference over to Tom Palmer, President and Chief Executive Officer. Please go ahead.
Tom Palmer: Thank you operator good morning.
Tom Palmer: Everyone. Thank you for joining our call.
Tom Palmer: I'm joined by my Executive leadership team, including Natasha Bulgarian apparel oven.
Tom Palmer: I'll be available to answer your questions at the end of the cold.
Tom Palmer: Please note of course, the restatement and refer to our SEC filings, which can be found on our website.
Tom Palmer: Before we discuss our third quarter performance I would like to take a moment to remember in 2014.
Tom Palmer: We tragically lost his life.
Tom Palmer: Production late last month.
We recognize that this is our fifth fatality in less than a year.
Tom Palmer: We are working diligently to strengthen and improve the safety systems.
Tom Palmer: Along with the key safety tools that we use in the field.
Tom Palmer: We are fully committed to understanding the factors that contributed to this tragedy.
Tom Palmer: And they're taking decisive action to improve our safety culture.
Tom Palmer: With a clear focus on effectively controlling all of the risks that could lead to a fatality.
Tom Palmer: We will also continue to transparently share the lessons we learned from the investigation without piece in the industry.
Tom Palmer: Improve the safety performance of our sector.
Speaker Change: Hey, Mark.
Speaker Change: Is it a strong safety culture is fundamental to sustainably delivering on our commitments.
Speaker Change: And it is al accountability to ensure that everyone working at game on return type Scyphate after each and every shift.
Speaker Change: Turning now to a summary of our third quarter.
Speaker Change: I'm honored to have recently been appointed as the next chair.
Speaker Change: National Council of Marty's metals.
Speaker Change: N N.
Speaker Change: I look forward to applying they've a greater role in advancing sustainability and responsible mining practices, but the demand and the cross sell industry.
Speaker Change: Jewellery my term as chair.
Speaker Change: One of my key priorities will be building support for the consolidated bonding standard initiatives.
Speaker Change: And I think we have strongly supported.
Speaker Change: Actively engaged over the last few months.
Speaker Change: These consolidated standards will be essential strengthening the industry's reputation and providing stakeholders with confidence.
Speaker Change: Commodities, we produce.
Speaker Change: And responsibly.
Speaker Change: Last week, we announced that we have partnered with MKS paths.
Speaker Change: The launch of our first entre pocket try spoke of a profile in the United States.
Speaker Change: I cant newmont's GOG directly accessible to consumers.
Speaker Change: Demonstrating our commitment to transparent sourcing.
Speaker Change: Shifting to our world class portfolio of tier one and emerging tier one operations in districts.
Speaker Change: In the third quarter, we produced nearly one 7 million ounces of gold.
Speaker Change: 130000 gold equivalent ounces from copper silver lead and zinc.
Notably this included 37000 tons of copper.
Speaker Change: We generated $1 $6 billion of cash flow from operations and $760 million in free cash flow.
Speaker Change: Our non core divestment program has advanced meaningfully since our last earnings call.
Speaker Change: With the two recently announced transactions expected to deliver up to $1 $5 billion in combined gross prices.
Speaker Change: The first announcement was a definitive agreement to divest the telephone line.
Speaker Change: 70% interest in the Hebron project in Western Australia, the total price eights of up to $475 million.
Speaker Change: We continue to progress the closing conditions and expect to complete the transaction this quarter.
Speaker Change: The second announcement was a definitive agreement to sell their chimbonda, He got up for up to $1 billion in cash consideration.
Speaker Change: And we also expect to close this transaction towards.
Speaker Change: At the end of the.
Speaker Change: With the solid progress we remain firmly on track to realize our commitment to generate at least $2 billion gross price age for the divestment of our noncore assets.
Speaker Change: It is also important to note.
Speaker Change: In addition to the $527 million in cash prices that we have already received this year for the London gold bar to each out transactions.
Speaker Change: Divestment progress and strong free cash flow generation.
Speaker Change: It positioned us to be able to continue reducing debt and returning capital to shareholders.
Speaker Change: Since our last earnings call, we have retired $233 million in debt.
Speaker Change: And returned $786 million to ask shareholders through share repurchases and quarterly dividends.
Speaker Change: We also approved an additional 2 billion dollar share repurchase program.
Speaker Change: Bringing our total authorization to $3 billion.
Speaker Change: In addition, we continue to safely advance three projects we have in execution.
Speaker Change: The second expansion of Panama.
Speaker Change: Gabe on the hot side no.
Speaker Change: The panel caves that carrier.
Speaker Change: And finally turning to synergies.
Speaker Change: When we announced our decision to acquire <unk> expressed we committed to delivering $500 million synergies from three areas.
Speaker Change: <unk> supply chain and our full potential program.
Speaker Change: And as of today, we haven't changed that $500 million synergy run rate.
Speaker Change: Starting with G&A.
Speaker Change: $100 million synergy run rate with the chase through labor rationalization in.
Speaker Change: Reductions in insurance costs and contractor spend.
Speaker Change: Moving to supply chain.
Speaker Change: Our team has been leveraging the skyla back on company to achieve improved commercial outcomes.
Speaker Change: They have already brought a synergy run rate from this area up to $200 million.
Speaker Change: And finally, we have begun to realize significant value from our full potential program.
Speaker Change: And I read in the delivery stage of our initiatives that Kt of Red Chris at play here.
Speaker Change: From this work, we'd have successfully surpassed $200 million synergy run rate.
Speaker Change: Potential upside to be realized in future years.
Speaker Change: The majority of the value realized so far has been attributed to cardiac due to the work we've been doing or efficiently move stockpile material.
Speaker Change: And to optimize the output from our high pressure grinding roll system in the middle.
Speaker Change: The initiatives that I touched on last quarter.
Speaker Change: And the remaining value of its coming from Red, Chris and let him.
Speaker Change: At Red, Chris, we're improving gold and copper recoveries from the optimization of both the grinding and flotation circuits.
Speaker Change: While also increasing throughput by delivering a more consistent I'll say to the middle.
Speaker Change: And here, we are focused on improving efficiency.
Speaker Change: The materials handling and crushing circuits as we mentioned on our first quarter earnings call.
Speaker Change: With our synergy commitment they are made and the divestment program will advance. We are now focused on sustainable value that we will deliver from our go forward portfolio of a labored advantaged.
Speaker Change: <unk> low block operations.
Speaker Change: So with that I'll now turn it I've attached for an operational update.
Speaker Change: And then to Karen to take us through our financial performance for the quarter.
Speaker Change: They use attachment.
Speaker Change: Thank you Tom.
Speaker Change: That's really into the final quarter of 2024, I'd like to start by re emphasizing the operational priorities I highlighted I think they gave me enough yeah.
Speaker Change: Our focus remains on three key objectives.
Speaker Change: It's making sure that every person okay.
Speaker Change: Got it fully equipped and authorized to do the work nicely.
Speaker Change: Second is continuing to deliver strong performance from our managed assets plus the old times guiding our non core assets and respectful and put it back to Scott for divestment.
Speaker Change: And last is enhancing long term productivity at every one of our managed tier one I imagine tier one operations.
Speaker Change: Turning to the next slide and let's begin with an operational review.
In the third quarter, our managed portfolio delivered a meaningful step up in production as planned producing for St. Paul called I'm mistaken for cat.
Speaker Change: Clothing maintain for a strong finish to the year with an anticipated 1.8 million ounces of gold in the fourth quarter.
Speaker Change: And the proximity I think in place I like I said quarter.
Speaker Change: This performance has been largely driven by a six managed tier one operations, which I know will touch on in more detail and I will start with a ton of mine.
Speaker Change: We began accessing hyatt right from the leather I to ore body and remain on track to the seventh day, yes strongest grades in the fourth quarter.
Speaker Change: At Boddington, we continue stripping in the north and South as planned which is expected to continue through 2025 and will bring full with strong gold and copper grades starting in 2026.
Speaker Change: Moving to finish ski town.
Speaker Change: Delivered steady gold silver lead and zinc production in the third quarter from the Chile, Colorado pit.
Speaker Change: And commenced mining or in the higher gold grade and that's well ahead of plan due to efficient stripping there.
Speaker Change: This will result in an increase in gold production in the fourth quarter and into 2025.
Speaker Change: And importantly, we have signed a new collective bargaining agreement with the Union had been a ski tablet, which safeguard the rights of all weapons and provides a solid foundation for operations as soon as Q3.
Speaker Change: 2026.
Speaker Change: Turning now to Katie.
Speaker Change: That's factored into our guidance right to Katie are expected to continue declining in the fourth quarter as we transition to and ramp up Nok two three.
Speaker Change: We are protesting integrated studies to align.
Speaker Change: I've met with a life of mine Chinese capacity seeking us out for the next three decades of ore feed.
Speaker Change: Our focus for Thailand.
Speaker Change: Maximizing capacity in the current embedded storage facility.
Speaker Change: The southern well off the northern facility, that's lumped in 'twenty I team and then rising the wall off the southern facility.
Speaker Change: These efforts are expected to contribute to a period of increased sustaining capital spend that kind of over the next few years as we make the necessary, but disciplined investment to remedy and expand the current Chinese facilities.
Speaker Change: At least here, we continue to progress the plant shutdown after primary ultra side, which remains on track to deliver an approximate 50% step up in gold production in the fourth quarter of 2024.
Speaker Change: She's a set for that.
Speaker Change: As we look ahead to 2025, Oh operational focus will remain on reducing complexity to deliver more sustainable and predictable results.
Speaker Change: Tier one operation.
Speaker Change: In the short term these assets will result in lower than initially anticipated production next year due to lower throughput to allow for asset reliability improvement work.
Speaker Change: And changes to the mine sequencing, including the establishment of wider ramps to manage surface water and repositioning all rights to be more effective and efficient.
Speaker Change: Once we complete this work we will be processing, a higher proportion of lower grade stockpiles in 2025.
Speaker Change: And we anticipate that gold production next yet from last year will be largely consistent with this yes.
Speaker Change: Around 250000 ounces can now than our initial guidance for 2025 that we provided back in February.
Speaker Change: Importantly, this work will simplify and improve operations at least here for the long term.
Speaker Change: Establishing it as a more consistent contributor as one of the 11 managed operations in our go forward portfolio.
Speaker Change: Similarly, a foolish check we have taken a step back this year to do the development and drilling work to ensure that we improve our knowledge of this nuggety ore body.
Speaker Change: We continue to experience periods of exceptional hike right.
Speaker Change: Clothing, a one day average of 52 grams, a tonne loss pattern.
Speaker Change: An average of I O.
Speaker Change: With 20 grams per tonne in the same week.
Speaker Change: As a result of the work we are doing we anticipate that the gold production next hear from please check well also be largely consistent with this yet.
Speaker Change: Or around 100000 ounces is nowhere in our initial guidance for 2025, and we provided back in February.
Speaker Change: Moving to our whole herself.
Speaker Change: In the third quarter, we achieved a significant increase in gold production of nearly 15% over the second quarter.
Speaker Change: And by higher bulk purchases.
Speaker Change: Following the successful glass replacement in April and strong grades from us because open pit and underground mines.
Looking ahead, we expect to hold ourselves to mine time consistent production levels in the fourth quarter and into next year before declining in the second half of 2025, when we complete mining activities at the Supercar open pit as planned.
Speaker Change: And finally during the fourth quarter, we expect to commence mining activities at all time lows.
Speaker Change: We will stop or to be used to commission the mol next yeah.
Speaker Change: This will be an essential milestones for our African business unit as it cheap is divested.
Speaker Change: And production is replaced with new low cost ounces from our wholesale north towards the end of 'twenty 'twenty five.
Speaker Change: Continuing with our Horizontals.
Speaker Change: We have made notable shift from land clearing and his legs to constructing the infrastructure for this new mine.
Speaker Change: The carbon in Leach tanks are complete and we continue constructing the crushing conveying and well infrastructure, which you can see in the photos in our presentation.
Speaker Change: Recently completed the lining of the tiny storage facility and are establishing the all routes to begin stripping at this new mine in the fourth quarter.
Speaker Change: I just think of expansion at Turner My our focus remains on the concrete lining off the shelf and we have completed more than a kilometer of this one five kilometer deep production shaft.
Speaker Change: As you can see in the photonics. The Winder building is now largely complete and we are preparing to install the wasting machinery, which will be used to rise and Noah our people.
Speaker Change: Or within the mine shaft once complete.
Speaker Change: Our cardiac panel caves project, he's probably seemed well.
Speaker Change: Oh gosh, two three we haven't achieved high establishment, meaning that the intended fracturing has begun and gravities now playing an important role in the mining processes.
Speaker Change: This is a significant milestone for this multi year project and we are successfully processing gold and copper ore from the skies.
Speaker Change: Over the next decade, I don't care. If two three is expected to deliver a million ounces of gold and more than 400000 tons of copper.
Speaker Change: That is anticipated to ramp up to an average of 400000 gold equivalent ounces.
Speaker Change: Between 2027 from <unk> 52.
Speaker Change: And final guys want to we continue to advance the underground development and the construction of the materials handling system.
Speaker Change: As a much larger case I don't okay for one two is expected to deliver nearly 4 million ounces of gold and more than 700000 tons of copper over a 15 year life and it is anticipated to ramp up to an average of 525000.
Speaker Change: Gold equivalent ounces between 'twenty.
Speaker Change: In 2014.
Speaker Change: And with that I'll turn it over to Karen.
Karen: Thank you Natasha.
Karen: The next slide I'll begin with an overview of our financial performance for the quarter.
Karen: Building upon Tom and Natasha's remarks, Newmont delivered strong third quarter results.
Karen: We reported adjusted EBITDA of $2 billion, driven by sustained gold prices and strong quarterly production.
Karen: And we recorded adjusted net income of 81 cents per diluted share an increase nine cents compared to the second quarter.
Karen: We also generated $1 6 billion cash flow from operations and $760 million of free cash flow, which does not include the approximately $300 million in cash payments received during the third quarter from the sale of the London gold financing facilities and batteries.
Karen: Zhou contingent payments announced earlier this year.
Karen: Free cash flow for the quarter includes $209 million of unfavorable working capital changes largely due to these bills and stockpiles of $202 million, mainly Atlas here until for.
And $107 million of reclamation spend primarily related to the construction of the Hana coach your water treatment facilities.
Karen: With $273 million in reclamation spend to date, we anticipate an approximate $225 million to be spent next quarter.
Karen: These unfavorable working capital changes were partially offset by the favorable timing for crude liability payments.
Karen: Looking ahead, we expect to reach your strongest production volumes in the fourth quarter positioning us to deliver strong free cash flows and to continue returning capital to shareholders.
Speaker Change: As Tom mentioned, the divestitures announced to date from our noncore portfolio are expected to generate up to $1 $5 billion in gross proceeds on top of the nearly 530 million cash proceeds received from other investment sales in 2024.
Speaker Change: And as we committed to earlier this year, we have been using the proceeds to create long term value for our shareholders by strengthening our balance sheet and repurchasing shares.
Speaker Change: Since our last earnings call, we repurchased nine 4 million shares at an average price of $53 16 per share for a total cost of $500 million.
Speaker Change: <unk> hundred $98 million repurchased during the third quarter and $302 million in October.
Speaker Change: And with $250 million remaining in the current program.
Speaker Change: <unk> Board authorized an additional $2 billion share repurchase program to be executed over the next 24 months, bringing our total authorization to $3 billion.
Speaker Change: Today, we've now completed $750 million of our $3 billion authorization.
Additionally, we declared a fixed common third quarter dividend <unk> 25 per share consistent with the dividend declared for the past three quarters.
Speaker Change: And we purchased $233 million and nominal debt $210 million or around 90 cents on the dollar of which $150 million was purchased during the third quarter and 83 million was purchased in October.
Speaker Change: To date, we've now retired nearly $500 million for the year.
Speaker Change: We maintain an investment grade balance sheet and ended the quarter $7 $1 billion in total liquidity.
Speaker Change: And our gross debt now stands at $8 $5 billion compared to our target of $8 billion.
Speaker Change: In line with our balanced capital allocation strategy, we continue to focus on maintaining a strong balance sheet steadily funding value accretive capital projects and returning capital to shareholders.
Speaker Change: Looking ahead, we expect approximately $1 8 million ounces gold production in the fourth quarter as planned.
Speaker Change: Production from our managed tier one assets continues to drive our strong operational performance and we remain on track to meet our full year production guidance.
Speaker Change: As signaled by our joint venture partner production from Nevada Gold mines, and <unk> is expected to significantly increase in the fourth quarter, which is crucial as these sites comprised just over 20% of our attributable gold production for 2024.
Speaker Change: All in sustaining costs for the fourth quarter are expected to be approximately $1475, an ounce, which represents an 8% reduction compared to the third quarter.
Speaker Change: This is a favorable decline is expected to be driven by higher gold production volumes and will be slightly offset by <unk>.
Speaker Change: Our sustaining capital reinvestment, primarily anticipated at Nevada Gold mines based on the run rate through the third quarter and caveat to remedy and expand the current tailings facilities as Natasha described.
Speaker Change: Increased production taxes, and royalties from higher oil price environment.
Speaker Change: And slightly higher G&A spend largely due to an increase in contracted labor.
Speaker Change: Turning to development capital, we expect to spend $320 million during the fourth quarter, keeping us on track to meet our full year guidance estimates for earlier this year.
Speaker Change: And we continue to expect to invest an average of $1 $3 billion per year enter projects that will generate the highest returns.
Speaker Change: With that I'll pass it back to Tom for closing remarks.
Tom Palmer: Thanks, Karen.
Tom Palmer: We remain confident in the long term strength go forward portfolio, we have assembled.
Tom Palmer: And continue to make solid progress on the four commitments, we made at the start of the year to our shareholders.
Tom Palmer: Since our last earnings call.
Tom Palmer: We continue to diligently implement the lessons learned from our recent fatalities.
Tom Palmer: And are working to strengthen and improve our safety and risk management systems.
Tom Palmer: We delivered higher production as planned keeping us firmly on track to meet our full year production guidance.
Tom Palmer: We generated $1 $6 billion of cash flow from operations $760 million in free cash flow.
We might meaningful progress on our portfolio rationalization.
Tom Palmer: He announced divestments of telephone ever achieved.
Tom Palmer: We achieved our synergy run rate target of $500 million.
Tom Palmer: We demonstrated our commitment to shareholder returns delivering $786 million.
Tom Palmer: Both regular dividends and share repurchases.
Tom Palmer: We strengthened our balance sheet with $233 million of debt reductions.
Tom Palmer: And we approved an additional $2 billion.
Tom Palmer: Share repurchase program, bringing our total authorization to $3 billion.
Tom Palmer: I think now guide almost a year of experience working with a new operations.
Tom Palmer: We have developed a much deeper understanding of their long term contribution to our core portfolio.
Tom Palmer: The work needed to create consistent and lasting value for our shareholders.
Tom Palmer: Looking ahead to 2025, we expect gold production from our go forward tier one portfolio.
Tom Palmer: <unk> largely consistent with this year.
Tom Palmer: Driven by the lower than previously expected production for two of our new operations in La <unk> and Bruce check.
Tom Palmer: We expect unit cost from our core portfolio in 2025 to align with the trends we are observing this year.
Tom Palmer: We also remain committed to the critical tailings work in Korea.
Tom Palmer: Which may result in an annual sustaining capital spend at around $1.8 million from our core portfolio over the next few years.
We continue to see.
Tom Palmer: Previously expected direct cost G&A spend.
Tom Palmer: That with the clarity of our go forward portfolio, we are now working to manage.
Tom Palmer: With this context.
Tom Palmer: Tim and I have a laser focus on the work we need to do to optimize our go forward portfolio of 11 managed operations and three projects in execution.
Tom Palmer: Whilst we do anticipate production growth out of time I'll focus is firmly on expanding margins.
Tom Palmer: Generally a strong return on capital invested.
Tom Palmer: And creating value.
Tom Palmer: Chasing volume.
Tom Palmer: We are taking a critical look at our organic project pipeline and spending time to ensure that any reinvestment we make into our portfolio.
Tom Palmer: But disciplined.
Tom Palmer: And deliberate.
Tom Palmer: And we are applying an economic lens to the long term decisions, we are making today.
Tom Palmer: Ensuring that we deliver on demos purpose to create value and improve lives through sustainable responsible body for decades to come.
With that well. Thank you for your time today and turn it back over to the operator to open the line for questions.
Speaker Change: Thank you.
Speaker Change: We will now begin the question and answer session. We ask that you. Please limit your inquiries to one primary question and one follow up question.
Speaker Change: I'll ask a question you May press Star then one on no touch time fine. If you were using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
Speaker Change: At this time, we will assemble goes to assemble our roster.
Speaker Change: And our first question comes from Daniel Major at UBS. Your line is open. Please go ahead.
Speaker Change: Oh, sorry can you hear me okay.
Speaker Change: Yeah.
Speaker Change: Thanks, Dan told him great great. Thanks.
Speaker Change: Yes sort.
Two parts to your question, but I mean, the first one.
Speaker Change: It's perhaps a kind of reflection on the industry as well but.
Speaker Change: When I look back to February and you look at your cost profile in medium term like many in the gold industry you've got.
Speaker Change: Costs coming down over time.
Speaker Change: Over the next few years, yet this year.
Speaker Change: Goodness.
Speaker Change: Standing cost $100 higher than you saw in February.
Speaker Change: Is it realistic incredible to actually assume that unit costs will moderate at a time or should we broadly be assuming the best case outcome is limiting inflation.
Speaker Change: Thanks, Dan I'll kick that off and parents don't want to jump in as well.
Speaker Change: Certainly if I think about the gold industry, there's always been a strong correlation between our golf course, and the cost of producing a golf.
Speaker Change: Given the big Flash is one of those structural elements behind the Gulf cost. So as you look forward.
Speaker Change: <unk> uses that you'd expect the cost to produce an estimation, obviously, you've got as you say some tracking.
Speaker Change: Between the cost per ounce in the Gulf Ross I'll talk with seasonal but what we are putting in place is that we.
Speaker Change: 511 managed operations going forward, when we got to where we're going to be in a position to be looking out for the long term and in strengthening and growing those margins.
Speaker Change: The other comment I'll buy before possibly pounds she wanted to build on that.
Speaker Change: Is when you look at the numbers that we had provided back in February.
Speaker Change: Zero is caution.
Speaker Change: So when you think about any any faulty numbers, that's there's no escalation and obviously, what we're saying as we get closer to 2020 follow up the run rates, we're seeing as we close out this year I'm actually going to flow into next year as we as we understand the cost for the next 12 to 15 months Karyn anything you'd go with that.
Speaker Change: I think that's the right time it just.
Speaker Change: To emphasize this out years as you mentioned don't have an escalation and us generally.
Speaking as we indicated the cost that we're seeing here in 2024, and we do expect us yet to trend into 2025 mm costs were higher driven by higher direct costs, primarily if you think about the.
Speaker Change: Contract Labor, which is 50% of our our cost structure, we've seen those increase into the third quarter and and <unk> through the year and so we expect that that's been built and now into a question of cost estimates as we head into 'twenty 'twenty five.
Speaker Change: Thanks, Karen.
Speaker Change: For the second part to your question.
Speaker Change: Yeah, Yeah, sorry, Uh huh.
Speaker Change: Okay.
Speaker Change: Yeah, just again just thinking about your guidance comments for 2025, you previously look to you in February around 6 million ounces from the core portfolio.
Speaker Change: With gold you highlight in the comments 250000 ounces lower than your previous plans at <unk> and 108.
Speaker Change: [noise] Bruce Jack So is it fair to then assume 350000 of the $6 million is the new base when we look into 2025.
Speaker Change: Okay.
Speaker Change: Yeah. Thanks, Dan So that added to the 10 movers in terms of that managed managed portfolio.
Speaker Change: And as I think as an attached to sit in my remarks, and I'll follow it up with the drivers behind that March 2nd ear in and getting getting getting in sort of understanding.
Speaker Change: The reasonable Skiff addition of Bruce Jackson.
Speaker Change: The development drilling you need to do for them.
Speaker Change: Most of those are progressing well, but it's the the ounces for next year is linked to that important work.
Speaker Change: I think the numbers. If you then look at the rest of the portfolio and those trends coming through from from 20.
Speaker Change: Falling into 'twenty five.
Speaker Change: The numbers for lunch guests on six we should think about this portfolio for 2025 core portfolio between respond obviously, we've got some some.
Speaker Change: Some divestments to lock to close out and Stuart.
Speaker Change: What you're doing on that front some of that will flow into 2025, because we can play.
Speaker Change: Core portfolio occupancy is about that gold production numbers in X gene.
Speaker Change: Okay. Thanks, so yeah, that's sort of broadly flat production and costs into next year or is the message.
Speaker Change: Thank you thank.
Speaker Change: Thanks, Dan that's correct.
Speaker Change: The next question comes from Josh Wolfson from RBC capital markets. Josh. Your line is open. Please go ahead.
Josh Wolfson: I. Thank you very much I'm trying to wrap my head around the change a significant change in sort of cost expectations at some degree of production expectations going forward.
Josh Wolfson: What we had been hearing about previously and I guess, there's sort of two different aspects at least that I can understand you know one is.
Josh Wolfson: Despite the synergy targets being achieved it sounds like there is some larger integration issues given the challenges are higher cost mentioned that cross Bruce Jack We're hearing Kdr and then on the other hand, we're hearing significant and unexpected inflation expectation changes, which I guess.
Josh Wolfson: Would be a larger industry related item I, just wanted to sort of clarify how should we be thinking about these things.
Josh Wolfson: And am I sort of assessing this appropriately thank you.
Speaker Change: Thanks, Joseph let me kick off and keep.
Speaker Change: Kevin you might want to jump in.
Speaker Change: I didn't pick it up and to see a positive to.
Speaker Change: The commentary around Lithia Cerro <expletive>. Thank you mentioned is really the Q3 cost story.
Speaker Change: So it's around midyear.
Speaker Change: We had some costs that we would be in the fourth quarter for the launch with a client shutdowns CHRISTUS library to revive part of the world leading into Q3. So that's one of those drops the <unk> power.
High power costs coming off of our contract with <unk>.
Speaker Change: Cerro <expletive> it was more around the ramping up following the tragedy easier this year, making sure. We're focused on I'm doing that quick slides for some productivity impacts and then the other factor in the in the third quarter was we had some.
Speaker Change: Some concentrate sales at Qdoba.
Speaker Change: Didn't get away at the end of the third quarter due to some weather impacts there.
Speaker Change: Uh huh.
Speaker Change: That's sort of a bit of a wrap up of the third.
Speaker Change: Third quarter cost story.
Speaker Change: I looked at 'twenty four flowing into 'twenty for us.
So there's two two impacts as the volume impact, we just talked about with.
Speaker Change: With Dan and.
And Bruce Jack work next year linked to that.
Speaker Change: Within the cost impact is.
<unk> capital and particularly around the work, we're putting into the tailings facilities at Acadia.
Are you just going to say plus SKU last several several panel price would come on.
Speaker Change: It's work, we need to do to ensure that Thomas capacities matched to the volumes coming out of those as panel types. So that stories around volumes for them. So that's a couple of key drivers.
Speaker Change: Its stunning capital count on attach rate that you're building.
Speaker Change: Sure just to a little more granularity in terms of 'twenty 'twenty four so about a third of that has increased due to that lower sales volume and putting in extra telfer I'm hearing Bruce check another third relates to that higher sustaining capital that we've been talking about are largely driven by Nevada, and then the remaining third.
Speaker Change: That is about royalties are due to higher gold price and half associated with the G&A, So our run rate synergies.
Speaker Change: Are driven by the targeted benefits Acadia Red Chris Zimmer here. However, we've also had a performance challenges within the business, including to tell for Calix.
Speaker Change: As well as the they're not manage that have underperformed expectations, but and I think further to that supply chain and G&A G&A benefits have been impacted by our need to invest in the future of this combined tier one portfolio with a key focus in areas with the integration from Newcrest into new mine estimate it at that.
Speaker Change: We're not happy with where we're at and we're working to reduce these costs.
Speaker Change: Okay.
Speaker Change: Thanks, Karen.
Speaker Change: Just if I can add a follow up question just sort of understanding if there's a quantum that can be provided in terms of maybe what the inflation trends as the company is seeing something that we can think about for modeling forecast on operating costs or capital costs or is there sort of any initial impressions you have.
Speaker Change: With inflation rates are running at currently.
Speaker Change: And just what we're seeing in terms of.
Speaker Change: It will cost around shippers feel materials that that's largely in line with what the world thinks that there's nothing particularly surprising tourists.
Speaker Change: The lives of course, we were saying that his question, particularly the contracted lineup, but we're seeing some of those escalations come through and then incorporating that into now.
Speaker Change: In the sort of the commentary, Steve with giving so what plays into next year.
Speaker Change: The next question comes from Matthew Murphy from Jefferies.
Speaker Change: Please go ahead your line is open.
Speaker Change: Hi.
Matthew Murphy: I'm wondering if you can elaborate a little more on what this outlook for 2025 means going forward in terms of.
Speaker Change: Those initial graphical what kind of indications.
<unk> had production growing over 6 million ounces costs falling to call. It the mid two hundreds announce I mean should we be.
Speaker Change: Should we be.
Speaker Change: Giving thinking.
Speaker Change: Thinking about 2025.
Speaker Change: <unk>.
Speaker Change: In 2026, and beyond let's say five and a half million ounce a year.
Speaker Change: 500 ASC type.
Speaker Change: Company that we're going to see going forward.
Speaker Change: Okay.
Speaker Change: Good morning, Matt I'll say I think if I look at it.
Speaker Change: Costs.
Speaker Change: You're certainly going to.
Speaker Change: But given in February there was no escalation there so.
Speaker Change: Make assumptions about what what physicalize deflation either.
Speaker Change: Links to what Gopro smart doing this exit fees.
Speaker Change: Gold producers in the Gulf crossing and that's going to be a pretty significant drop in the cost of producing announced the golf market and any other on the Gulf of Aden company. So that's that's one trend that will flow through.
Speaker Change: And I'll, obviously Gulf cross sell for cost to come off.
Speaker Change: We see our portfolio as we complete the basement work in the first part of next year really started focusing on al <unk> managed operations and the three projects that got an execution approach.
Speaker Change: It's an execution will start to deliver <unk> in the latter part of next year and then that flows through to 'twenty six 'twenty seven so we do have some new lower cost ounces coming on.
Speaker Change: And that will help us.
Speaker Change: Have I portfolio of operations that over the long term around around or about that six be announced run rate.
Speaker Change: And about 150000 tonnes of copper.
Speaker Change: We're not going to chase volume for volume sake, we're focused is going to be on driving margins.
Speaker Change: And and ensuring that we are getting the best value the best return on that capital.
Speaker Change: That's invested.
Speaker Change: Another another draw the all our all in sustaining cost is the important work, we're putting into tiling facilities on ensuring that we have a set of tailings facilities that have the appropriate capacity and structure to support these very low cost operations. So we have some of that spend which is you.
Speaker Change: So it's been consistent over the whole top of their periods of elevated spending sustaining capital in any mining company as you show your topics facilities are up to up to scratch sucks.
Speaker Change: Another factor in terms of our 2025 and 2026 story.
Speaker Change: Okay.
Speaker Change: Let me just go ahead sorry.
Speaker Change: Yeah.
Speaker Change: I am I wanted to build a little bit on Tom's point on the 6 million run rate and just as a reminder, boddington in two years of high stripping and lower than normal ounces boddington will get back to its normal production, but if it keeps up we'll start to see coming back in in the deal.
Speaker Change: Yeah.
Speaker Change: We have been predicting all along that we will see lower grades coming through but SPC two three compensating them.
The next two years, we will see Kt of production step up as well and then the U S.
Speaker Change: Two years of high investment and we'll start to get back into higher grade ores.
Speaker Change: In the near term.
Speaker Change: That's two just both a little bit of granularity on top split and particularly if we get more ounces out of the shaft, Panama as it gets commissioned it.
Speaker Change: 27, 28 of our North Star to just go into the second half of next year. So we've got that that reinvestment back in the business brings ounces on that complement the numbers, we're talking about for this year and next year.
Speaker Change: Okay and is there a timeline, where you're thinking you'll be able to provide more formal asset by asset multi year guidance is that the plan maybe early next year.
Speaker Change: Okay.
Speaker Change: <unk> cost back into next year, we'll certainly be focusing on getting quite a granularity on the 2025 numbers in February.
Speaker Change: B C.
Speaker Change: Still in there we're still in this year at the end of the second phase of the divestment of our North American assets and networks progressing well, but we need to because that that work and as we get that clearone is thought to completing that divestment program.
Speaker Change: Living managed operations going forward and a strict purchasing execution.
Speaker Change: Is that clarity to come come back with some more more color on less comfortable with the portfolio into next year.
Speaker Change: The next question comes from Anita Soni from CIBC. Your line is open. Please go ahead.
Speaker Change: Yeah, a lot of the questions.
Anita Soni: Uh Huh I guess were not part of the questions I had were all very detail oriented, but don't seem not relevant anymore.
Anita Soni: Can I just ask you in terms of I guess longer term Katy.
Anita Soni: Dust emissions like when do you expect to get approvals for that.
Anita Soni: And that's what gets you to 35 million tonne per annum rate.
Speaker Change: Sorry, I'm not sure if you if I could just put a little clarity dust emission emissions.
Anita Soni: I just want to make sure I.
Speaker Change: I understand your question.
Alright.
Speaker Change: The original goal our target was to get to I think 45 million tonnes per annum is that still valid and what kind of.
Speaker Change: Approvals do you need and when do you expect those.
Speaker Change: Okay. Thank you I just wanted to make sure that that because the dust is not necessarily directly related to that timing.
Speaker Change: Those.
Speaker Change: There's a couple of things that needs to happen around the the tiling Stan that is all underway. The first thing is I've mentioned these they.
Speaker Change: Can we pay off.
Speaker Change: Southern all of the northern Dan.
Speaker Change: And then they said that expansion that's armies onto why these a number of tenants.
Speaker Change: Applications that are in place and underway.
Speaker Change: We are balancing the <unk>.
Speaker Change: Mid teen requirements the expansion of the tiling Stan.
Speaker Change: D Cavia, Hi, Arnold <unk> development to make sure that we've got optimal capital efficiency.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Cerro <expletive> our original target I think was around $3 5 million tonne per annum I think youre doing.
Speaker Change: Your ear significantly under that right now and have been for a while when do you think you'll get that asset up to the original target or is that still about right.
Speaker Change: Cerro <expletive>.
Speaker Change: Largest focus area for Cerro <expletive> is in productivity, making sure that we the baseline operation gets back to where we needed to be from a productivity point of view, we've got all of the mining areas available. We have all of the equipment Dividable. So the focus is 100%.
Speaker Change: Activity to bring us back to Amy H B.
Speaker Change: Thanks to data.
Speaker Change: The next question comes from Mike Parkin from National Bank, Mike. Your line is open. Please go ahead.
Speaker Change: Hey, guys.
Speaker Change: Congrats on getting the.
Speaker Change:
Synergy target and achieved a $500 million.
Speaker Change: How much of that flowed through opex.
Speaker Change: Good morning, Mike This but obviously the G&A component of that is part of your Opex.
Speaker Change: The supply chains of combination between.
Speaker Change: Roofing costs and opportunity to get to productivity and volume.
Speaker Change: A lot of the full potential work is around ramp volume say you get you get some more productivity with the current gold price you get that benefit flowing through.
Speaker Change: Probably a default setup of the amount of that delivery.
Speaker Change: It's probably less than half is coming from that and operational cost.
Speaker Change: Trustee proof, which as opposed to the productivity and volume and purpose of the free cash flow to get coming through.
Speaker Change: If I look through that.
Speaker Change: If I look at where we sit this one of the earlier questions. As we were closing out the integration an important product plus you have the integration is completing out divestments and having a clear line of sight to 11 managed operations trade projects in execution I'm not happy with the G&A that we have that guy food business in that scenario.
Speaker Change: We're gonna be focusing all to get that to get that number down to match. The go forward business and that's up a little bit of that high cost to carry as you move through that transition, but as we get that clarity on the remaining divisions going up or do we need to mature spit out G&A as mentioned.
Speaker Change: With regards to the business and expect to see some.
Speaker Change: We are working hard because we've proven in that area in the months ahead.
Speaker Change: Okay, and just a follow up on that.
Speaker Change: You've achieved that is not fully reflected.
Speaker Change: In your Q3 numbers I'm just wondering when you look at your quarter over quarter, Opex, you're up about 7% quarter over quarter.
Speaker Change: And to understand where the savings come in the fourth quarter guidance.
Speaker Change: Yeah, all of the synergies have already been realized.
Speaker Change: Or is it a bit of a deferral in terms of when they start to flow through the financials.
Speaker Change: Yes, I think you'll see certainly Doug does that impact the cost base.
Speaker Change: And every now direct costs I think what you got.
Speaker Change: They draw from that is going to play through in the fourth quarter is very strong our gold production quarter.
Speaker Change: We're certainly we're certainly well set up to be delivering on that can be pushed through the fourth quarter. So that's that's what you're going to see drop that that improvement in the saltwater is that.
Speaker Change: Hi production getting them styles matching our production to ensure that the unit costs up.
Speaker Change: Coming to the levels that we are.
Speaker Change: We have guided to for the fourth quarter.
Speaker Change: The next question comes from Lawson Winder from Bank of America Loosen. Your line is open. Please go ahead.
Speaker Change: Okay.
Lawson Winder: Thank you operator, good morning, Tom and team and thank you for the update I just wanted to ask you about capital.
Speaker Change: Capital allocation and in the context of Oh.
Speaker Change: A new story that the prime minister of PNG.
Speaker Change: Recently called on all stakeholders involved and Rafi to finalize the special mining lease and the mine development contract sort of a S. A P I.
Speaker Change: He actually set a deadline of December.
Speaker Change: December of this year and so it got me thinking in terms of capital allocation is that a sign that what he might be taking precedent.
Speaker Change: Preferred project in the in the portfolio over some of the other options.
Speaker Change: Hey, good morning, listen we continue to work very closely with our joint venture partners harmony in the PNG government on.
Speaker Change: Almost negotiations to confirm what is a very bright Boston competitive framework.
You bet.
Speaker Change: Trudeau mineral development contracts and all the special mining lease with David the renewal process.
Speaker Change: Got into Bob to understand updates to feasibility studies at a whole bunch of study would come once you've reached that completion with us negotiations so important work and.
Speaker Change: Working very constructively with all the parties around the table.
Speaker Change: Any project in our pipeline.
Speaker Change: Competing for capital and we are going to be very disciplined in terms of any projects that we that we tightened up execution.
Im going to have confidence in terms of the cost to build at the time to deliberate and the returns from that invested capital.
Speaker Change: Our plate is full with great projects in execution Catamount expansion too.
Speaker Change: And the pedal kind of as a caveat.
Speaker Change: We've got to ensure that we properly deliver on our commitments on those projects.
Speaker Change: And only then we bring on.
Speaker Change: Next project.
Speaker Change: And.
Speaker Change: Well if we go through sits there in the pipeline with five other very interesting projects to compete for capital.
Speaker Change: Okay. Thanks, very much in that context, and then just as a follow up on some of the earlier questions on the on the labor inflation.
Speaker Change: That drove the.
Speaker Change: The cost a little higher in the quarter.
Speaker Change: You know I believe yourselves and some of your peers budgeted at approximately 4% labor inflation for 2024, I mean, it would be helpful to kind of put some numbers around that in terms of.
Speaker Change: What's the realized experience in terms of labor inflation. So far this year are you expected versus that that 4% that seems to be the industry standard at the start of the year.
Speaker Change: Yes. Thanks.
Speaker Change: Direct costs half the half the cost is labor.
Speaker Change: About half of that is our employee base.
Speaker Change: And that's the focus when you think about the people who work for <unk> Ross.
Speaker Change: Countries, but when you average out aggregates.
Speaker Change: Why just the license about 4%.
Speaker Change: The other the other cost prices the costs too for all of the contracted services, we use whether that'd be the shutdowns.
Speaker Change: Bank used to supplement your workforce.
Speaker Change: Cost of running camps cost of falling paper from almost all of those those sorts of costs.
Speaker Change: What we're saying.
Speaker Change: Some escalation beyond what we assumed at the start of the year and as we look into 2025.
Speaker Change: And that's what we that's what we're guiding to today in terms of saying that is caused by through so.
Speaker Change: Obviously those costs are escalated over the course of this year and looking to the.
Speaker Change: To capture that level of escalation that we see flowing through next year in terms of that brought up.
Speaker Change: Unit cost you more in 2024.
Speaker Change: Next question comes from Alex Hacking from Alex Your line is open. Please go ahead.
Alex Hacking: Yeah. Thanks, I just wanted to clarify some of the guidance commentary from earlier.
Alex Hacking: On next year too.
Alex Hacking: <unk> from tier one.
Alex Hacking: It's going to be flattish.
Alex Hacking: What assumption is embedded.
Alex Hacking: And that on Nevada goldmine. Thank you.
Speaker Change: Yeah. Thanks, Alex to answer that question, we got here, we provide a granularity on the year end.
Alex Hacking: And British Jack in terms of.
Any significant moves in our managed portfolio the rest of the operations in our core portfolio going forward. When we're shipping the run rates you're seeing through the course of this she will flow through 2024.
Alex Hacking: Yeah.
Speaker Change: So just to clarify in Nevada gold mines.
Speaker Change: Sure.
Speaker Change: Alex I'm answering that question in terms of the rest of our portfolio without getting specific.
Speaker Change: Okay.
Speaker Change: And then on the <unk>.
Speaker Change: On the following up on Matt's question on the midterm outlook.
Speaker Change: It sounds like $6 7 million ounces in 2028 and.
Speaker Change: Under review, let's say.
Speaker Change: But did I hear you say Tom.
Tom Palmer: 6 million ounces as the.
Tom Palmer: It's kind of a midterm target or did I did I mishear that.
Tom Palmer: Yeah. Thanks, Alex went up when I look at out, but I'll look at out 11 managed operations and the three projects, we're going to execution that will deliver ounces over the next three to five years into that that portfolio of operations that remains 11 managed operations.
Tom Palmer: Because the rule is essentially brownfield expansions.
Tom Palmer: And the long life nature of those ore bodies under they start to deliver managed operations you've got several decades that in front of them.
Tom Palmer: I'll look at that portfolio insights.
Over the longer term on average around six P analysis ago about 150000 tonnes of copper might have some years, we push north of six and there'll be other years, where you have yourself a six but over the long term. It's that's what that's how we think about this portfolio we've assembled.
Tom Palmer: 11, plus $361 50.
Tom Palmer: And grow the next graph is it margins.
Tom Palmer: We five years stepped off thanks, Alex.
Speaker Change: The next question comes from Tanya <unk> from Scotiabank. Your line is open. Please go ahead.
Great. Good morning, everyone. Thank you so much my question.
Tanya: I just wanted to come back to the call. So just so that we understand what is newmont related and water industry related.
Tanya: Just wanted to make sure Tom on the cash I understand that what newmont related and these costs have to do with your particular operations on volume, which you've given us some lower volumes that Lee here Jack.
Tanya: And then you've given us.
Tanya: The.
Tanya: Additional sustaining capital that you have at some of your house and Acadia on your tailings in Nevada Gold mines.
Tanya: Now you mentioned G&A as well on your all in sustaining.
Speaker Change: Is it fair to assume that the only industry related cost is the.
Speaker Change: Is your labor, which pertains to the car.
Speaker Change: Contractors, which have yet.
Speaker Change: And as the labor costs and the extent of that is contractors.
Speaker Change: If that's the case.
Speaker Change: Tommy I remember you mentioning that.
Speaker Change: Contractor inflation was like 12% or 14% if I can remember correctly can.
Speaker Change: Can you just maybe share with us where you are seeing.
Speaker Change: Contractor inflation is it related in Australia.
Is it in the U S. I'm just trying to understand if it's also.
Speaker Change: Oh, that's my first question just I'm trying to understand if I understand it correctly.
Speaker Change: Thanks, Tony and good morning, just just clarifying you're talking about 25. This is 24.
Speaker Change: As you will keep your numbers.
Speaker Change: Yeah, Yeah, Yeah, I think the.
Speaker Change: Certainly the 25 to 24 to 25 stories is the volume story in the sustaining capital story.
Speaker Change: Largely what you're saying is the costs, we're seeing this year.
Speaker Change: Lie about weather.
Speaker Change: Employees or contracted levels staying about the same going into the next year.
Speaker Change: And it's the the drive of Reis.
Speaker Change: Lower volume and the sustaining capital of 24 to 25.
Speaker Change: Uh huh.
Speaker Change: Labor.
Speaker Change: Contractors.
Speaker Change: Correct.
Speaker Change: To have that dropped to 14% inflation and your contractors has that not changed I'm just trying to understand that.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Think about answering it this way can you in terms of what's in our cost run rate as we closed at 24.
Speaker Change: Boeing into 'twenty follow up it looks like a step up of the sort of percentages you're talking about right.
Speaker Change: Right.
Speaker Change: Of course, as we close out the year.
Speaker Change: We're seeing that flow into 'twenty five.
Speaker Change: Okay.
Speaker Change: Alright.
Speaker Change: <unk>.
Okay, maybe I'll ask my second question Ma'am.
Speaker Change: Maybe just on <unk>.
Speaker Change: Tasha Kate.
Speaker Change: You mentioned that you know it.
Speaker Change: As we look into next year and the year after.
Speaker Change: The next two years, we're going to have that KBR production decline from about 370000 ounce level.
Speaker Change: Can you just share with us where I should think about the time before we start back up again in the other case.
Speaker Change:
Speaker Change: I think yes, that's that's right Tanya and you will remember we have been signed that SBC, one NBC to come to the end of state laws.
Speaker Change: <unk> of its life, we see lower grades coming through and we have been predicting that we'll continue to see that going into next year.
Speaker Change: <unk> three mm.
Speaker Change: Is now ramping up so we've seen that case actually ties and we will slowly Iraq that over the next two years to full production and 82 three will again start to imply similar production from D. C. How basically one and.
Speaker Change: And they basically want to is ugly targeted towards the end of the day guide.
Speaker Change: This concludes the question and answer session I would like to turn the conference back over to Tom Palmer for closing remarks.
Tom Palmer: Thank you operator, and thanks, everyone for joining us this morning, and and have good rest of your day. Thank you.
Tom Palmer: Okay.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: [music].
Speaker Change: Yeah.